Financial Highlights The company's FY2022 saw revenue growth in continuing operations, a substantial reduction in overall loss, and shifts in asset and liability structure Financial Highlights In FY2022, continuing operations revenue grew 4.75% to RMB 216 million, gross profit declined, and overall loss significantly narrowed to RMB 58 million, with non-current assets increasing and current assets decreasing Summary of Profit or Loss and Other Comprehensive Income | Metric (RMB million) | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Continuing Operations | | | | | Revenue | 216.0 | 206.2 | 4.75% | | Gross Profit | 68.4 | 73.2 | (6.56%) | | Loss for the Year | (72.1) | (82.6) | (12.71%) | | Discontinued Operations | | | | | Profit/(Loss) for the Year | 14.2 | (163.7) | (108.67%) | | Full Year Results | | | | | Loss for the Year | (58.0) | (246.3) | (76.45%) | | Loss Attributable to Company Shareholders | (55.2) | (245.3) | (77.50%) | | Basic Loss Per Share (RMB cents) | (7.7) | (33.5) | - | Summary of Financial Position | Metric (RMB million) | December 31, 2022 | December 31, 2021 | Change | | :--- | :--- | :--- | :--- | | Non-current Assets | 1,044.6 | 900.7 | 15.98% | | Current Assets | 405.8 | 653.9 | (37.94%) | | Current Liabilities | (180.1) | (203.7) | (11.59%) | | Non-current Liabilities | (165.9) | (185.8) | (10.71%) | | Net Assets | 1,104.5 | 1,165.1 | (5.20%) | - No interim or final dividends were declared for FY2022, compared to an interim dividend of HKD 1.0 cent per share declared in FY202112 Chairman's Statement Despite 2022 challenges, the Chairman reported stable revenue through diversified strategies, including divesting underperforming segments, shifting textile focus to domestic markets, operationalizing property investments, and expanding environmental water projects, expressing optimism for 2023 Chairman's Statement Despite 2022 challenges, the Chairman reported stable revenue through diversified strategies, including divesting the underperforming RMAA service segment, strategically shifting textile focus to domestic markets, operationalizing the 'Yongsheng Building' property investment, and actively expanding environmental water projects, with optimism for 2023 economic recovery and business growth - Facing textile industry challenges, the Group strategically shifted its market focus to the domestic market, successfully acquiring local customers and effectively offsetting the loss of overseas orders5554 - The 'Yongsheng Building' in Hangzhou has commenced operations, with shops and most office floors successfully leased, providing a stable income source for the Group3031 - The Group decisively divested its RMAA service segment in June 2022 to mitigate its adverse impact on overall financial performance and reallocate resources to other advantageous businesses, such as environmental water projects5935 - The Group actively expanded environmental water projects, successfully launching a water supply project in Malaysia, with both the Zhejiang Deqing and Malaysian water projects expected to enter a stable return period and generate positive cash flow in 20233460 Business Review The Group's 2022 business review highlights a decrease in total turnover but an increase in gross profit and margin, driven by strategic divestments, property investment growth, and new environmental water projects Overall Business Performance In 2022, total turnover decreased by 14.0% to RMB 232.5 million, yet gross profit increased by 4.7% to RMB 69.8 million, with overall gross margin rising to 30.0%, primarily due to improved occupancy at Yongsheng Building and a significant 77.5% reduction in loss attributable to shareholders Overall Business Performance in 2022 | Metric | 2022 | 2021 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Turnover | 232.5 RMB million | 270.5 RMB million | -14.0% | | Gross Profit | 69.8 RMB million | 66.7 RMB million | +4.7% | | Overall Gross Margin | 30.0% | 24.6% | +5.4pp | | Loss Attributable to Shareholders | 55.2 RMB million | 245.3 RMB million | -77.5% | | Loss Per Share | 7.7 RMB cents | 33.5 RMB cents | - | Segment Review This year, the Group restructured its operations, with continuing businesses (dyeing and processing, property investment) seeing a 4.8% revenue increase driven by property investment, while dyeing and processing revenue declined and gross margin compressed; the discontinued RMAA business was sold for a pre-tax gain, and environmental water projects advanced as new growth drivers Dyeing and Processing of Differentiated Polyester Filament Fabric Affected by global consumption weakness, order shifts to Southeast Asia, and high raw material costs, this segment's revenue decreased by 8.6% to RMB 183.1 million, with gross margin significantly declining from 34.0% to 22.2% due to product mix changes and cost pressures, prompting a strategic shift to the domestic market Dyeing and Processing Segment Performance | Metric | 2022 | 2021 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Segment Revenue | 183.1 RMB million | 200.3 RMB million | -8.6% | | Gross Margin | 22.2% | 34.0% | -11.8pp | Property Investment The property investment segment performed strongly, with Yongsheng Building's increased occupancy contributing RMB 28.8 million in rental income and RMB 2.2 million in management service income, despite the Group recording an investment property fair value loss of approximately RMB 20.3 million due to the overall sluggish Chinese real estate market - Yongsheng Building's shops are substantially leased, with commercial occupancy further increasing, recording approximately RMB 28.8 million in rental income and RMB 2.2 million in management service income during the year101 - Due to the sluggish Chinese real estate market, the Group recorded an investment property fair value loss of approximately RMB 20.3 million10174 Environmental Water Project Operations The Group actively expanded its environmental water business in response to national green development policies, with the Zhejiang Deqing project commencing operations, industrial land acquired in Ma'anshan for environmental projects, and the Malaysian water supply project progressing as a potential benchmark for Southeast Asian market expansion - The Zhejiang Deqing project has completed quality inspection and officially commenced operations, accumulating experience for the Group in building renovation, waste treatment, and new material production10378 - The Group's water supply project in Malaysia is expected to become its first benchmark project, laying a crucial foundation for further overseas market expansion77105 Discontinued Operations (RMAA Services) Due to the persistent downturn in the Hong Kong RMAA market, the Group sold its RMAA service segment in July 2022 for RMB 29.5 million, generating a pre-tax gain of approximately RMB 15.6 million, with the segment's turnover before termination being approximately RMB 16.5 million, a 74.3% year-on-year decrease - The Group sold its RMAA segment in July 2022 for RMB 29.5 million, recording a pre-tax gain of approximately RMB 15.6 million, aiming to reallocate resources to more promising businesses44 Prospects For 2023, the Group is optimistic, planning to aggressively expand into the domestic market, especially in home textiles, benefiting from a recovering Hangzhou property market due to the Asian Games and relaxed policies, while continuing to advance environmental water projects in China and Southeast Asia to capitalize on green economy opportunities and diversify business - The Group plans to more actively explore the domestic market, expanding beyond apparel to focus on home textiles, confident in gaining market share through quality and cost-effectiveness80109 - Relaxed property market restrictions by the Hangzhou government and the upcoming Asian Games are expected to boost the local economy and real estate market, favorably impacting the Group's property investment projects, such as Yongsheng Building82108111 - The Group will continue to advance environmental and water projects in China and Southeast Asia, seizing green and circular economy opportunities supported by national policies84112 Financial Review The financial review details the Group's 2022 performance, highlighting revenue and gross profit trends, significant changes in expenses and other items, improved cash flow, and an updated liquidity and financial resources position Revenue and Gross Profit In 2022, the Group's total revenue from continuing operations increased by 4.8% to RMB 216 million, primarily driven by a 463.8% surge in property investment revenue, yet overall gross profit for continuing operations declined by 6.6% to RMB 68.41 million due to a 40.3% drop in dyeing and processing gross profit from increased production costs Revenue Breakdown from Continuing Operations (RMB thousand) | Segment | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | 1. Dyeing and Processing | 183,068 | 200,338 | (8.6)% | | 2. Property Investment | 32,946 | 5,844 | 463.8% | | Total | 216,014 | 206,182 | 4.8% | Gross Profit Breakdown from Continuing Operations (RMB thousand) | Segment | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | 1. Dyeing and Processing | 40,645 | 68,094 | (40.3)% | | 2. Property Investment | 27,766 | 5,152 | 438.9% | | Total | 68,411 | 73,246 | (6.6%) | Expenses and Other Items Sales and distribution expenses decreased by 43.2% year-on-year due to lower sales and reduced marketing, while administrative expenses remained stable; the Group recognized a RMB 20.3 million fair value loss on investment properties and a RMB 70.4 million remeasurement loss from reclassification, with finance costs increasing by 108% due to the cessation of capitalization - Sales and distribution expenses decreased by 43.2% year-on-year to RMB 1.1 million, primarily due to reduced sales staff salaries and bonuses in the dyeing and processing business and lower marketing expenses for Yongsheng Building14492 - The Group recognized an investment property fair value loss of approximately RMB 20.3 million, mainly due to the overall negative impact on the Chinese real estate market from pandemic controls and economic slowdown120148149 - The Group recognized a remeasurement loss of approximately RMB 70.4 million due to the reclassification of leasehold properties held for sale to completed investment properties127155 - Finance costs increased by 108% year-on-year to RMB 15 million, primarily because finance costs for Yongsheng Building ceased to be capitalized after it reached its intended use by the end of September 2021134161 Cash Flows In 2022, the Group's cash flow significantly improved, with net cash inflow from operating activities increasing to RMB 55.3 million, investment activities turning to a net inflow of RMB 44.3 million, and financing activities resulting in a net outflow of RMB 48.1 million, leading to an increase in cash and cash equivalents to RMB 143.8 million by year-end Summary of Cash Flow Statement (RMB thousand) | Item | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash Flows from Operating Activities | 55,256 | 31,361 | | Net Cash Flows from Investing Activities | 44,262 | (79,364) | | Net Cash Flows from Financing Activities | (48,147) | 47,369 | | Cash and Cash Equivalents at Year-End | 143,834 | 86,551 | Liquidity and Financial Resources As of year-end 2022, the Group's cash and bank balances increased to RMB 146.9 million, total bank borrowings decreased to RMB 216.1 million, the current ratio declined from 3.21 to 2.25, and the debt-to-equity ratio remained stable at 0.20, with a RMB 2.2 million impairment provision for loan receivables due to credit rating downgrades Key Financial Ratios | Ratio | 2022 | 2021 | | :--- | :--- | :--- | | Current Ratio | 2.25 | 3.21 | | Debt-to-Equity Ratio | 0.20 | 0.20 | - As of December 31, 2022, the Group's cash and bank balances (including pledged deposits) were approximately RMB 146.9 million, and total bank borrowings were approximately RMB 216.1 million670643 - The Group made an impairment provision of approximately RMB 2.2 million for loan receivables, primarily due to a decline in credit ratings for certain borrowers after assessment using Moody's rating methodology276301 Directors and Senior Management This section provides an overview of the company's board of directors and senior management team, highlighting their diverse professional backgrounds and extensive experience Directors and Senior Management This chapter details the background information of the company's board members and senior management team, comprising four executive directors and three independent non-executive directors with diverse professional backgrounds, and a senior management team with extensive experience in finance, project management, and company secretarial roles - Executive Directors: Mr. Li Cheng (Chairman), Mr. Li Conghua, Mr. Ma Qinghai, Mr. Xu Wensheng346352349323 - Independent Non-Executive Directors: Ms. Wong Wai Ling, Mr. Ho Shing Wing, Dr. Wang Huaping355357358 - Senior Management: Includes Mr. Liu Ming (Finance Director), Mr. Zhong Guowu (Vice President), Mr. Li Wenhua (Director and General Manager of Construction Projects), and Ms. Yeung Wing Kwan (Company Secretary)335396398399 Corporate Governance Report This report details the company's commitment to high corporate governance standards, outlining its board structure, committee functions, internal controls, risk management, and shareholder rights protection Corporate Governance Report The company is committed to high corporate governance, complying with Listing Rules Appendix 14, detailing its board structure, the functions and composition of its audit, nomination, and remuneration committees, internal controls, risk management, and shareholder rights protection, while also providing directors' liability insurance and continuous professional development - The Board of Directors comprises four executive directors and three independent non-executive directors, with independent non-executive directors constituting over one-third, maintaining a high level of independence384411 Board and Committee Composition | Committee | Chairman/Chairperson | Members | | :--- | :--- | :--- | | Board of Directors | Mr. Li Cheng (Chairman) | Mr. Li Conghua, Mr. Ma Qinghai, Mr. Xu Wensheng, Ms. Wong Wai Ling, Mr. Ho Shing Wing, Dr. Wang Huaping | | Audit Committee | Ms. Wong Wai Ling (Chairman) | Mr. Ho Shing Wing, Dr. Wang Huaping | | Nomination Committee | Mr. Li Cheng (Chairman) | Mr. Ho Shing Wing, Dr. Wang Huaping | | Remuneration Committee | Ms. Wong Wai Ling (Chairman) | Mr. Xu Wensheng, Dr. Wang Huaping | - The Board, through the Audit Committee, conducted an annual review of the Group's risk management and internal control systems, deeming them effective and adequate in financial, operational, and compliance aspects478530 - The report clarifies procedures for shareholders to convene extraordinary general meetings, propose resolutions at general meetings, and make inquiries to the Board, safeguarding shareholder rights539540519 Report of the Directors This report outlines the company's principal business activities, dividend policy, supplier and customer concentration, share repurchases, and details on directors' and major shareholders' interests and related party transactions Report of the Directors The Directors' Report outlines the company's principal business activities, including dyeing and processing, property investment, and environmental water projects, noting no final dividend proposed, moderate supplier and customer concentration, the repurchase and cancellation of 24.535 million shares, and detailed disclosures on directors' and major shareholders' interests, share option scheme changes, and continuing connected transactions Proportion of Major Suppliers and Customers | Category | Proportion | | :--- | :--- | | Purchases from Largest Supplier | 16.6% | | Total Purchases from Five Largest Suppliers | 48.7% | | Sales to Largest Customer | 16.1% | | Total Sales to Five Largest Customers | 40.4% | - During the review period, the company repurchased a total of 24,535,000 ordinary shares on the Stock Exchange for a total consideration of approximately HKD 14.79 million, with all repurchased shares subsequently cancelled681655 - As of the end of 2022, the company had 13,938,200 unexercised share options, with no new share options granted during the year169 - The Group entered into lease agreements with related parties (Yongsheng Trading, Yongsheng Holdings, Hangzhou Yibang) for parts of Yongsheng Building, which independent non-executive directors confirmed to be on normal commercial terms180181189 Environmental, Social and Governance Report This report details the Group's ESG strategies and practices, covering environmental management, employee welfare, supply chain responsibility, anti-corruption, and community investment, with the Board overseeing ESG strategy and stakeholder communication Environmental, Social and Governance Report This report outlines the Group's ESG strategies and practices, focusing on environmental conservation through ISO 14001 certification and systematic waste management, social responsibility covering employee welfare, supply chain, product liability, and anti-corruption, and governance with the Board overseeing ESG strategy and stakeholder engagement - In environmental management, the Group has obtained ISO 14001 environmental management system certification and Global Recycled Standard GRS4.0 certification, establishing detailed procedures for managing exhaust gas, wastewater, and waste700728730 Key Emissions and Waste Data for 2022 | Metric | Emissions/Volume | Intensity | | :--- | :--- | :--- | | Wastewater Volume | 570,179 tonnes | 2,452.2 tonnes/RMB million sales | | Carbon Dioxide | 13,449.27 tonnes | 73.46 tonnes/RMB million sales | | Hazardous Waste | 475 tonnes | 2.59 tonnes/RMB million sales | - Regarding employees, as of year-end 2022, there were 282 full-time employees, with an overall turnover rate of approximately 6.1% during the year, and the company provided 4,574 hours of vocational training819811 - In community investment, the Group donated approximately RMB 1.368 million to local communities and social organizations during the year, earning titles such as 'Top Ten Enterprise' and 'Advanced Taxpayer Enterprise'883885 Independent Auditor's Report The Independent Auditor's Report provides an unmodified opinion on the consolidated financial statements, highlighting key audit matters related to trade receivables and investment property valuation Independent Auditor's Report Ernst & Young, the auditor, issued an unmodified opinion on the company's 2022 consolidated financial statements, affirming their true and fair view of the Group's financial position and performance, with key audit matters focusing on expected credit loss provisions for trade receivables and investment property valuation, both involving significant management judgment and estimates - Ernst & Young, the auditor, issued an unmodified opinion on the Group's consolidated financial statements914 - Key audit matters include: * Expected credit loss provision for trade receivables: due to significant management judgment and estimates involved in determining expected credit losses * Valuation of investment properties: due to significant judgment and assumptions used in determining the fair value of investment properties920922 Financial Statements This section presents the Group's consolidated financial statements, including the statement of profit or loss, financial position, and cash flows, providing a comprehensive overview of its financial performance and health Consolidated Statement of Profit or Loss and Other Comprehensive Income In FY2022, the Group reported total revenue of RMB 232.5 million and gross profit of RMB 69.8 million; loss from continuing operations was RMB 72.1 million, but a profit of RMB 14.2 million from discontinued operations significantly narrowed the full-year net loss to RMB 58 million, with loss attributable to company shareholders at RMB 55.2 million and basic loss per share at RMB 7.7 cents Summary of Consolidated Statement of Profit or Loss (RMB thousand) | Item | 2022 | 2021 (Restated) | | :--- | :--- | :--- | | Continuing Operations | | | | Revenue | 216,014 | 206,182 | | Gross Profit | 68,411 | 73,246 | | Loss for the Year | (72,126) | (82,579) | | Discontinued Operations | | | | Profit/(Loss) for the Year | 14,164 | (163,744) | | Loss for the Year | (57,962) | (246,323) | | Loss Attributable to Company Shareholders | (55,178) | (245,307) | | Basic Loss Per Share (RMB cents) | (7.7) | (33.5) | Consolidated Statement of Financial Position As of December 31, 2022, the Group's total assets were RMB 1,450 million, total liabilities RMB 346 million, and net assets RMB 1,105 million; non-current assets increased to RMB 1,045 million due to investment property value, while current assets decreased to RMB 406 million from reduced completed properties held for sale, and total equity declined to RMB 1,105 million Summary of Consolidated Statement of Financial Position (RMB thousand) | Item | December 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Total Non-current Assets | 1,044,622 | 900,725 | | Total Current Assets | 405,838 | 653,861 | | Total Assets | 1,450,460 | 1,554,586 | | Liabilities and Equity | | | | Total Current Liabilities | 180,056 | 203,681 | | Total Non-current Liabilities | 165,862 | 185,822 | | Total Liabilities | 345,918 | 389,503 | | Net Assets | 1,104,542 | 1,165,083 | | Equity Attributable to Company Shareholders | 1,101,887 | 1,160,311 | | Total Equity | 1,104,542 | 1,165,083 | Consolidated Statement of Cash Flows In FY2022, net cash flow from operating activities significantly increased to RMB 55.26 million, investing activities shifted to a net inflow of RMB 44.26 million due to reduced capital expenditure and subsidiary disposal, and financing activities resulted in a net outflow of RMB 48.15 million from increased loan repayments, leading to a net increase of RMB 51.37 million in cash and cash equivalents, with a year-end balance of RMB 143.8 million Summary of Consolidated Statement of Cash Flows (RMB thousand) | Item | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash Flows from Operating Activities | 55,256 | 31,361 | | Net Cash Flows from Investing Activities | 44,262 | (79,364) | | Net Cash Flows from Financing Activities | (48,147) | 47,369 | | Net Increase/(Decrease) in Cash and Cash Equivalents | 51,371 | (634) | | Cash and Cash Equivalents at Beginning of Year | 86,551 | 89,718 | | Cash and Cash Equivalents at End of Year | 143,834 | 86,551 |
永盛新材料(03608) - 2022 - 年度财报